Note: 1 Company Overview
Sri Lakshmi Saraswati Textiles (Arni) Limited is a public limited company incorporated and domiciled
in India and has its registered office at No. 16, Krishnamma Road, Nungambakkam, Chennai -
600 034. The company's shares are listed in BSE Ltd. The company is principally engaged in the
manufacture of yarn and surgical face masks. The company is also engaged in generation of
electricity from its windmills for its captive consumption. The financial statements of the company
for the year ended 31st March 2025 were approved and adopted by the Board of Directors of the
company in its meeting held on 24th May 2025.
Note: 2 Statement of compliance
All accounting policies followed by the company are in accordance with the Indian Accounting
Standards (Ind AS) notified u/s 133 of the Companies Act, 2013 read with the Companies (Indian
Accounting Standards) Rules,2015 and conform to Schedule III to the Companies Act, 2013 as
applicable.
Note: 3 Basis of Preparation and Compliance
The financial statements are prepared in accordance with the historical cost convention except for
certain items that are measured at fair values at the end of each reporting period, as explained in the
accounting policies set out below. The financial statements are prepared on a going concern basis
using accrual concept except for the cash flow information.
Historical cost is generally based on fair value of the consideration given in exchange for goods and
services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date, regardless of whether that price
is directly observable or estimated using another valuation technique. In estimating the fair value of
an asset or a liability, the Company takes into account the characteristics of the asset or liability if
market participants would take those characteristics into account when pricing the asset or liability at
the measurement date.
Fair value for measurement and/or disclosure purposes in these financial statements is determined
on such a basis and measurements that have some similarities to fair value but are not fair value,
such as net realizable value in Ind AS-2 inventories or value in use in Ind AS 36 - Impairment of
Assets.
In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2,
or 3 based on the degree to which the inputs to the fair value measurements are observable and the
significance of the inputs to the fair value measurement in its entirety, as described hereunder:
Level 1 -Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity
can access at the measurement date.
Level 2 -Other than quoted prices included within Level 1, that are observable for the asset or liability,
either directly or indirectly; and
Level 3 - Unobservable inputs for the asset or liability.
Note: 4 Material Accounting Policy Information
Pursuant to the Companies (Indian Accounting Standards) Amendment Rules, 2023 effective 01-04¬
2023, the company is required to disclose 'material accounting policy Information' in lieu of the earlier
requirement of disclosing 'significant accounting policies'.
Specific disclosure of material accounting policy information where Ind AS permits options is made
hereunder:
The company has assessed the materiality of the accounting policy information, which involves exercising
judgement and considering both quantitative and qualitative factors by considering not only the size
and nature of the item or condition but also the characteristics of the transactions, events or conditions
that could make the information more likely to impact the decisions of the users of the financial
statements.
Note: 5 Significant Accounting Policies and key accounting estimates and judgments Significant Accounting
Policies
5.1 Property, Plant and Equipment (PPE)
i. For transition to Ind AS, the Company has elected to continue with the carrying value of all of its
PPE recognised as of April 1, 2016 (transition date) measured as per the previous IGAAP as its
deemed cost as on the transition date.
ii. Depreciation is recognized so as to write off the cost of assets (other than freehold land and
properties under construction) less their residual values over their useful lives, using the straight¬
line method. The estimated useful lives and residual values are reviewed at the end of each
reporting period and changes, if any, are treated as changes in accounting estimate. The useful
lives are based on technical estimates and the management believe that the useful lives are
realistic and fair approximation over the period of which the assets are likely to be used.
5.2 Intangible assets
Intangible assets with finite useful lives that are acquired separately are carried at cost less
accumulated amortization and accumulated impairment losses. Amortization is recognised on a
straight-line basis over their estimated useful lives. The estimated useful life is reviewed annually
with the effect of any changes in estimate being accounted for on a prospective basis.
Intangible assets are amortized equally over the estimated useful life not exceeding three years.
5.3 Financial assets
a. Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortized cost.
The debt instruments carried at amortised cost include Deposits, Loans and advances recoverable
in cash.
• the asset is held within a business model whose objective is to hold assets in order to collect
contractual cash flows; and
• the contractual terms of the instrument give rise on specified dates to cash flows that are
Solely payments of principal and interest on the principal amount outstanding.
All other financial assets are subsequently measured at fair value.
b. Investments in equity instruments at FVTOCI
The Company has irrevocably designated to carry investment in equity instruments as Fair Value
Through Other Comprehensive Income (FVTOCI). On initial recognition, the Company makes an
irrevocable election (on an instrument-by-instrument basis) to present the subsequent changes in
fair value in Other Comprehensive Income pertaining to investments in equity instruments. This
election is not permitted if the equity investment is held for trading. These elected investments are
initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value
with gains and losses arising from changes in fair value recognised in Other Comprehensive
Income and accumulated in the 'Reserve for equity instruments through Other Comprehensive
Income'. On derecognition of such Financial Assets, cumulative gain or loss previously reported in
OCI is not reclassified from Equity to the Statement of Profit and Loss. However, the Company may
transfer such cumulative gain or loss into retained earnings within equity.
The Company has equity investments which are not held for trading.
Dividends on these investments in equity instruments are recognised in the Statement of Profit or
Loss when the Company's right to receive same is established, it is probable that the economic
benefits associated with the dividend will flow to the Company, the dividend does not represent a
recovery of part of cost of the investment and the amount of dividend can be measured reliably.
c. Impairment of Financial Assets
In accordance with Ind AS 109, the Company uses “Expected Credit Loss” (ECL) model, for
evaluating impairment of financial assets other than those measured at Fair Value Through Profit
and Loss (FVTPL).
Expected credit losses are measured through a loss allowance at an amount equal to:
• The 12 months expected credit losses (expected credit losses that result from those default
events on the financial instrument that are possible within 12 months after the reporting date); or
• Full lifetime expected credit losses (expected credit losses that result from all possible defaults
events over the life of the financial instrument).
For trade receivable, Company applies 'simplified approach' which requires expected lifetime losses
to be recognised from initial recognition of the receivables.
For other assets, the Company uses 12 months ECL to provide for impairment loss where there is no
significant increase in credit risk. If there is significant increase in credit risk, full lifetime ECL is used.
d. Financial liabilities
All financial liabilities are initially recognised at the value of respective contractual obligations. Financial
liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortized
cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that
are subsequently measured at amortized cost are determined based on the effective interest method.
Interest expense that is not capitalized as part of costs of an asset is included in the 'Finance costs'
line item.
5.4 Inventories
Inventories other than by-products are stated at lower of cost and net realizable value. Inventory of by¬
products is stated at net realizable value. Materials and other items intended for use in production of
inventories are not written down below cost if the finished goods in which they will be incorporated
are expected to be sold at or above cost.
Cost comprises of all costs of purchase (that includes taxes and duties, net of input tax credit
entitlement), costs of conversion and other costs incurred in bringing the inventories to their present
location and condition.
Cost of raw materials, consumables, stores and spares is determined on weighted average basis
and includes inward freight and other direct expenses.
Net realizable value is the estimated selling price less estimated costs for completion and sale.
Obsolete, slow moving and defective inventories are periodically identified and written down when
necessary.
5.5 Revenue Recognition
a. Sale of products
Revenue is recognized upon transfer of control of the products to customers at a point in time i.e.,
when the products are delivered to the carrier in an amount that reflects the consideration that the
company expects to receive in exchange for those products.
b. Interest Income
Interest income from a financial asset is recognized when it is probable that the economic benefits
will flow to the company there exists no uncertainty in the ultimate realization of the interest income
and the amount can be measured reliably. Interest income is accrued on a time basis, by reference
to the principal outstanding and using effective interest rate method.
c. Insurance Claims
Insurance claims are recognized on the basis of claims admitted/ expected to be admitted and to the
extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate
collection.
5.6 Government grants
Government grants are not recognised until there is reasonable assurance that the Company will
comply with the conditions attaching to them and that the grants will be received.
Grants are recognised in the Statement of Profit and Loss on a systematic basis over the period in
which the Company recognises as expense the related costs which the grants are intended to
compensate. Specifically, Government grants whose primary condition is that the Company should
purchase, construct or otherwise acquire non-current assets are recognised as deferred revenue in
the Balance Sheet and transferred to the Statement of Profit and Loss on a systematic and rational
basis over the useful lives of the related assets.
Grants that are receivable as compensation for expenses or losses incurred or for the purpose of
giving immediate financial support to the Company with no future related costs are recognised in the
Statement of Profit and Loss in the period in which they become receivable.
5.7 Employee Benefits
(a) Short term employee benefits
All employee benefits payable wholly within twelve months of rendering the service are classified as
short-term employee benefits and recognised in the period in which the employee renders the
related service. The Company recognizes the undiscounted amount of short-term employee benefits
expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting
any amount already paid.
(b) Post-employment benefits
(i) Defined Contribution Plans
Contribution to Defined Contribution Schemes towards retirement benefits in the form of Provident
fund is recognised as expense in the Statement of Profit and Loss during the period in which the
employee renders the related service.
(ii) Defined Benefit Plans
The Company operates Defined Benefit Gratuity Plan for employees. The cost of providing defined
benefits is determined using the Projected Unit Credit Method with actuarial valuations being carried
out at each reporting date. The defined benefit obligations recognised in the Balance Sheet represent
the present value of the defined benefit obligations as reduced by the fair value of plan assets, if
applicable. Any defined benefit asset (negative defined benefit obligations resulting from this
calculation) is recognized representing the present value of available refunds and reductions in
future contributions to the plan.
All expenses represented by current service cost, past service cost, if any, and net interest on the
defined benefit liability/ (asset) are recognised in the Statement of Profit and Loss. Remeasurements
of the net defined benefit liability / (asset) comprising actuarial gains and losses and the return on
the plan assets (excluding amounts included in net interest on the net defined benefit liabilities /
asset) are recognised in comprehensive income and taken to “retained earnings”. Such re¬
measurements are not reclassified to the Statement of Profit and Loss in the subsequent periods.
The Company presents the above liability /(asset) as current and non-current in the Balance Sheet
as per actuarial valuation by the independent actuary. However, the entire liability towards gratuity is
considered as current as the Company will contribute this amount to the gratuity fund within the next
twelve months.
The Company is exposed to various risks in providing the above gratuity benefit which are as
follows:
Interest Rate risk: The plan exposes the Company to the risk of fall in interest rates. A fall in interest
rates will result in an increase in the ultimate cost of providing above benefit and will thus result in
an increase in the value of the liability (as shown in financial statements).
Investment Risk: The probability or likelihood of occurrence of losses relative to the expected return
on any particular investment.
Salary Escalation Risk: The present value of the defined benefit plan is calculated with the assumption
of salary increase rate of plan participants in future, based on past experience. Deviation in the rate
of increase of salary in future for plan participants from the rate of increase in salary used to
determine the present value of obligation will have a bearing on the plan's liability.
Demographic Risk: The Company has used certain mortality and attrition assumptions in valuation
of the liability. The Company is exposed to the risk of actual experience turning out adverse compared
to the assumptions.
(c) Other Long-term Employee Benefits
Entitlement to earned leave and sick leave is recognised when it accrues to employees. Earned
leave/ sick leave can be availed or encashed either during service or on retirement subject to a
restriction on the maximum number of accumulation of leave. The Company determines the liability
for such accumulated leave using the Projected Unit Credit Method with actuarial valuation being
carried out at each Balance Sheet date.
5.8 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,
(which are assets that necessarily take a substantial period of time to get ready for their intended
use) are added to the cost of those assets, until such time as the assets are substantially ready for
their intended use or sale. Interest income earned on the temporary investment of specific borrowings
pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for
capitalization. All other borrowing costs are recognised in the Statement of Profit and Loss in the
period in which they are incurred.
5.9 Foreign Currency Transactions
a. Initial Recognition
On initial recognition, transactions in foreign currencies are recorded in the functional currency (i.e.,
Indian Rupee), by applying to the foreign currency amount the spot exchange rate between the
functional currency and the foreign currency at the date of the transaction.
b. Measurement of foreign currency items at reporting date
Foreign currency monetary items are translated at the closing exchange rates. Non-monetary items
that are measured at historical cost in a foreign currency, are translated using the exchange rate at
the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency,
are translated using the exchange rates at the date when the fair value is measured.
c. Recognition of exchange difference
Exchange differences arising on the settlement of monetary items or on translating monetary items
at rates different from those at which they were translated on initial recognition during the period or in
previous financial statements is recognised in profit or loss in the period in which they arise.
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